Organisations find themselves in a world of ever-increasing rate of change. Increasingly
organisations operate in what is known as the edge of chaos—that zone which paradoxically
might lead to paralysis and disaster or to creativity and innovation. In this area of uncertainty,
organisations rely on their ability to create new organisational knowledge. What is unclear is
exactly how new knowledge comes into being under these conditions and what would count
as new organisational knowledge.
The thesis tries to shed light on the process by which new organisational knowledge comes
into being by considering the context of complexity as an environment that demands
innovation while at the same time being the catalyst for knowledge creation. The debate on
the nature of organizational knowledge is revisited and contrasted from individual
knowledge. A review of the mainstream theories of organisational knowledge creation led up
to Boisot’s Social Learning Cycle as the benchmark theory that is used in the rest of the
argument.
Thereafter the work of Weick on Organisational Sensemaking is discussed. It is argued that
the condition of complexity leads to an increase in occasions that activate and heighten
organizational sensemaking processes. Parallels are noted between the process of
sensemaking and parts of the Social Learning Cycle. It is shown that under conditions of
comlexity, organisational knowledge creation processes and sensemaking processes are not
only similar, but that organisational sensemaking can be seen as the mechanism whereby new
organisational knowledge is created when organisations operate at the edge of chaos.
This has a number of implications. The theory of organisational sensemaking is applied to an
area of organisational life where it has not been seen as applicable, organisational knowledge
creation processes are shown to be much more fundamental phenomena than the literature
suggests, and combining Boisot and Weick leads to greater theoretical elegance.